Corona crisis: Tax-free bonus payments for employees

Employers in particularly busy industries can grant their employees bonus payments that are tax- and social security-free up to an amount of 1,500 euros.

In an interview with Bild am Sonntag, German Finance Minister Olaf Scholz announced the possibility of tax-free bonus payments to employees: "Many employers have already announced their intention to pay their employees a bonus. As Federal Minister of Finance, I will issue an instruction on Monday that such a bonus of up to 1,500 euros will be completely tax-free." However, the minister's mere announcement is not yet a legal basis for making bonus payments tax-free. However, an official regulation needs some time due to the necessary coordination with the states. Employers can therefore either already pay out the bonuses tax-free in anticipation of this change, or initially withhold the wage tax and later reimburse the employee if there is a legal basis for doing so.

However, the German Federal Ministry of Finance already announced details of the planned regulation in a press release on April 3. According to this, employers can pay their employees allowances and benefits up to an amount of 1,500 euros tax-free or grant them as benefits in kind. Special benefits received by employees between March 1, 2020, and December 31, 2020, will be covered by the benefit. The prerequisite is that the allowances and benefits are paid in addition to the wages owed anyway. The tax-exempt benefits must be recorded in the payroll account. Other tax exemptions and valuation reliefs remain unaffected by this special regulation. The allowances and benefits are also exempt from social security contributions.